The breakdown of trade talks with China remains up for interpretation. The U.S. market reaction to tweets from President Donald Trump on Sunday was muted compared to what was seen in Asia. Also worth noting is that the markets had become less worried than they had been early in the day when traders and investors were trying to interpret the news. After preliminary indications of the Nasdaq Composite Index opening down 2%, the reaction after about 90 minutes of trading was that the Nasdaq was down less than 1%. The Dow Jones industrials and the S&P 500 were also indicated to be down about 1.7% each heading into the open, and they were each down less than 0.8% after the first 90 minutes of trading.
24/7 Wall St. has compiled a bird’s-eye view of how some reactions are coming in from the initial reports. It seems that a consensus is building that perhaps this is a last-minute tactic to get China to more readily agree to terms to avoid tariffs increasing in a few days. After all, it is widely believed that the trade impact had a far greater drag and damage in China than it did in the United States.
The Hang Seng (Hong Kong) closed down 2.9% on Monday and the SSE Composite (Shanghai) down a sharper 5.58% on Monday.
Several firms have already issued updates on how they view the tweets and the implications to Sunday’s tweets. The tweets from @realDonaldTrump on Sunday:
….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!